Older consumers: tomorrow’s most important target group

The growing importance of older consumers is illustrated clearly by their future share of total consumer spending in various countries. In the US, the over-50 age group is projected to account for 62 cents in every dollar of total consumer spending by 2050, up from 56 cents in 2020. In China, the projection is for older consumers to account for 65 fens (cents) of every yuan spent and in Switzerland 61 rappen for every franc spent.

These projections for consumer spending demonstrate that older consumers will in future be the most important age-based target group for businesses in the consumer goods industry. The over-50 age group already accounts for a large proportion of total consumer spending, yet most businesses pay relatively little attention to this group. For example, various studies show that just 5 to 10 per cent of the marketing budget of US companies is spent on targeting older consumers.

How then can companies tailor their offer more to the older consumer segment and derive greater benefit from the market potential it represents? One approach to answering this question lies in an in-depth look at the consumer behaviour of the over-50 age group and at differences in the needs and preferences of younger and older consumers.

More spending on health products and food but less on housing and energy

Different consumer age groups already diverge in terms of what they spend most money on. This is demonstrated by a breakdown of the proportion of their total spending that goes on differing areas: the chart below shows the spending of an average individual aged 34 or under with that of an individual aged 55 or over.

The biggest differences are in spending on health, food, housing and energy. For example, spending on health products is twice as high among older consumers than among younger consumers (6% and 3% respectively) – an unsurprising finding. More interestingly, consumers over 55 spend around one-third more on food and non-alcoholic drinks than those 34 and under (16% and 12% respectively). It is reasonable to assume, therefore, that as the proportion of older people in the total population increases around the world, so too will the relative importance of their spending on health products and food.

Under-represented in advertising, yet fitter than ever

When businesses target consumers, such as through advertising, images and videos are an important part of their marketing approach. A study by AARP investigated how older people are portrayed in online media. Although almost half the US population was over the age of 50 in 2019, only 15 per cent of advertising used images of older people. In the same vein, the Deloitte survey finds that over two-thirds of over-50s in Switzerland (68%) would like advertising to use more realistic images of their age group.

Advertising under-represents people over 50 and often portrays them negatively

Source: Deloitte
 

Companies also need to reflect the difference between chronological age and subjective age when targeting marketing at older consumers. Chronological age measures an individual’s actual age in years, whereas subjective age describes their own perception of how old they are or their feelings about their age. The difference between chronological and subjective age is likely to be less important to younger age groups, but longer life expectancy and improvements in healthcare now mean that older consumers often perceive themselves to be younger than their chronological age. It is therefore unsurprising that 85 per cent of respondents aged 50 and over identify more with their subjective age than with their chronological age.

Loyal to familiar brands and quality-conscious

As they age, consumers become more risk-averse in their purchases and in their willingness to experiment with new products or services. For example, research shows that those with a higher subjective age are more cautious in their purchases and are less likely to research new goods and services. In contrast with younger consumers, older people are less likely to seek out information about new products, but they also make more effort to avoid buying the wrong thing. Ultimately, they tend to remain loyal to the goods and services they are already familiar with.

Another way in which older consumers reduce their risk of making unsuitable purchases is to be more conscious of quality and, hence, tending to rule out cheaper goods. They do this by attaching greater weight to product labelling and prioritising well-known brands when making purchases. Research finds that knowing where something was made and using that information as an indicator of quality is more important to older than to younger consumers. This is also true of Switzerland, where eight out of ten older consumers (80%) report that knowing where something was made is an important factor in their purchasing decisions compared with just 65 per cent in the 34-and-under age group.

Desire for age-friendly design of brick-and-mortar shops

Brick-and-mortar shops are important to older age groups: as consumers age they tend to make greater use of local shops. Regardless of distance, physical shops enable older consumers to interact with others – and in some cases, this may be their only social interaction. Research studies indicate that older customers value three aspects of physical shops in particular.

First, this age group reports that their customer satisfaction is influenced mostly by the interaction they have with sales staff. As many as 92 per cent of older consumers in Switzerland report that having efficient and friendly sales staff is important to them.

Age-friendly shopping in physical shops is important to the over-50 age group

Source: Deloitte
 

Second, older customers value being able to reach items on the shelves easily, in particular if they have a physical impairment but also because they are likely to be less tall than younger people. Around eight in ten older consumers in Switzerland (83%) say this aspect is important to them when they go shopping.

Third, older customers place strong emphasis on having equipment that functions and enables them to shop independently. For around three-quarters of older consumers surveyed (77%), it is important that baskets are not broken and that trolleys run smoothly. Damaged equipment can rapidly create challenges for older customers with physical conditions.

Open to new technologies provided they are user-friendly and offer clear added value

The rollout of new technologies continues to transform how consumers utilise products and services. The likelihood that older consumers will make use of a product reliant on new technology depends crucially on two factors: how easy it is to use; and what added value they can expect from the product. More than eight out of ten older people in Switzerland (84%) stipulate that a product based on new technology must be easy to use, whereas this is less important to younger people, who are more likely to find new technology physically and cognitively user-friendly.

Over-50s prioritise new technologies that are easy to use and offer clear added value

Source: Deloitte
 

More than eight in ten older consumers in Switzerland (85%) also consider added value to be an important factor in the decision to use a product based on new technology. This aspect is of less importance to the under-35 age group, of whom 70 per cent attach importance to added value. One reason for this divergence may be that older people find it mentally more demanding to familiarise themselves with new technology, such as a digital product, than younger people do. The added value of new technologies therefore has to be high for older consumers to perceive a positive cost-benefit from switching to such products.

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